Consumer Data: Widespread & Accessible
Marketers know when you’re shopping for a car, if you’ve recently gotten married or divorced, approximately how much money you earn and how you compare to other people in your zip code, the grocery store you most frequent and if your favorite hobby is golf or garden-ing. Acxiom utilizes a variety of sources including public domain data to match individuals with one of their 70 distinct clusters in 21 life stage
groups. Datalogix builds consumer profiles based on data from retail
store loyalty programs from more than 1400 leading brands. Equifax, via their subsidiary The Work Number, collects salary and paystub
infor-mation for 1/3 of U.S. adults as a result of the firm’s employee verifica -tion service.
The consumer data market is well established and, fueled by unique
data streams, continuing to refine the industry’s ability to target indi -vidual consumers for sales and marketing purposes. This raises the question the industry has been addressing since its inception. Why are consumers willing to share information about their consumer behavior
to assist retailers in their effort to sell goods and services? The answer
lies in the value delivered to the consumer. By joining a loyal
shop-ping program, consumers receive discounts and special offers that justify their participation in such programs. Frequent flyer members
receive perks and incentives, such as preferential treatment, that further
increase loyalty to specific airlines and encourage program participa
-tion. In the digital realm, users embrace the 70+ free services offered by Google or the social benefits derived from participating in social net -works such as Facebook due to the value these services deliver to their users. As a result, a tacit agreement is established between consumers and the companies that collect and analyze their consumer behavior data. By participating in such data-driven programs and networks, consumers are either implicitly or explicitly agreeing to the utilization of
their marketing data in exchange for the benefits associated with loyalty programs, frequent flyer membership, warranty cards, Google’s ser -vices or Facebook’s social network.
Commercializing Internet
Activity Data:
The Balance
of Value, Transparency and
Privacy
Consumers agree
to the utilization
of their marketing
data when the
benefit
to the
consumer justifies
participation.
The utilization of internet subscriber data to improve consumer
mar-keting efforts is the next logical step for an industry that’s existed for
decades. The rise of the data-driven solutions of today are enabling
the consumer data and marketing services industry to offer advertisers increasingly nuanced and complete profiles of consumer behavior.
A number of inter-related trends are transforming the consumer data industry and, ultimately, facilitating the industry’s ability to utilize past consumer behavior to predict future consumer interest. The integration of computers, mobile phones and tablets into the daily life of the typi-cal consumer clearly illustrates the value derived by consumer through internet usage. Yet, when viewed through the lens of the marketing services industry, consumers are also delivering value by informing communications service providers of their unique interests, locations and relationships. The advancement in data analytics technology is em-powering service providers – via their underlying internet infrastructure – to establish themselves as indispensible contributors to the consumer
data industry’s effort to refine consumer profiles and transition from ag -gregate to individual delineations.
Types of Data: Volunteered Data, Observed Data & Inferred Data The consumer data industry utilizes three primary categories of data to
develop consumer profiles for advertisers: volunteered data, observed
data and inferred data.
Historically, volunteered data has served as the foundation of consumer
profiles. Examples from the offline market include applications for credit
cards and consumer credit, warranty cards, surveys and other tradition-al means of data collection. From a digittradition-al perspective, the emergence of social networks – and the willingness of consumers to share personal
information on such networks – has resulted in an influx of valuable
data available to assist marketing services companies in their consumer
profiling efforts. To provide context for the scope of this development,
Facebook claims to process 3.2 billion “likes” and comments per day from the 1.1 B users on the Facebook network.
Joining a frequent flyer or loyalty shopper program is considered vol -unteered data within the industry, but participation within the program grants marketers observed data. These programs provide marketing departments with insight into the past behavior of their own customers,
but this information is also valuable to companies offering complimen -tary – or competitive – products and services.
With regard to the increase in the typical consumer’s digital footprint, observed data gleaned includes individual location data as a result of
mobile phone usage and internet activity data via the fixed network
through the deployment of “cookies” and retargeting technologies and strategies. In terms of scope, Forrester Research expects the U.S.
mo-When viewed by
the marketing
services industry,
consumers are
delivering value by
informing
communications
service providers
of their unique
interests, locations
and relationships.
Inferred data is the process of leveraging volunteered and observed
data to build deeper profiles and infer deeper insight into a consum -er’s future buying patterns. Volunteered data, such as a consum-er’s
credit application provides useful and verifiable information. Combin -ing this data with observed data, such as multiple applications for credit from the same consumer in a short amount of time, provides additional insight. By combining multiple data points, a clearer under-standing of the consumer’s behavior – in this example, creditworthi-ness – emerges via inferred data analysis.
Ideally, the combination of data sets provides decision-making context for situations such as evaluating the creditworthiness of an
applicant or presenting the right advertisement or offer to the right
consumer at the right time. In practice, aggregate and individual
con-sumer profiles are conspicuously incomplete and outdated – despite
industry leaders such as Acxiom boasting the accumulation of 1500 unique data points for every consumer in the U.S.
Consumer Data & the Quest for Context
Despite the expansion of the consumer data and marketing services
industry in both scope and application, the typical consumer profile
contains incomplete or aged information and lacks the context – in terms of past and predictive consumer behavior – that is the industry’s
ultimate goal. The right offer to the right person at the right time is the
ambitious target, but a far cry from reality.
To address this shortcoming, traditional offline data and marketing
services providers are establishing relationships with their digital
counterparts to optimize each other’s existing consumer profiles. The
recent partnership between Acxiom and Facebook is a prime example
of, arguably, the most significant development in the data analytics and marketing services industry. The marriage of traditional, offline
data analytics companies and online over-the-top service providers to
optimize consumer profiles in terms of context, timeliness and persis -tence.
Despite the expansion of the consumer data and marketing services industry in both scope and application, the typical consumer
profile contains incomplete or aged
information and lacks the context – in terms of past and predictive consumer behavior – that is the industry’s ultimate goal.
Service providers could utilize
in-session, first party behavioral
data to deliver data streams for a
wide variety of retail categories.
This opportunity for internet service providers to augment the exist-ing data analytics and marketexist-ing services market is unprecedented.
Consumer profiles that incorporate data from frequent flyer and loyalty
reward programs, past purchasing behavior, locational data and insight gained from social network activity are increasing in their sophistication. Yet, internet service providers – by virtue of their underlying internet infrastructure – have a unique perspective of consumer’s past behav-ior and future interest. For example, service providers could deliver
in-session, first party behavioral data streams detailing a consumer’s
“online search propensity” for a wide variety of retail categories. This is a level of insight valued by the market and, increasingly, understood and accepted by consumers as information to be disclosed for commercial purposes given the proper circumstances.
Consumer Data: The Value/Disclosure Continuum
Google, Facebook, Yahoo, Twitter, LinkedIn, Hulu, FourSquare, Spotify, Pinterest and Tumblr. The internet’s most innovative companies have
adopted a business model that reveals two significant trends impacting
the consumer data market. The success of these companies proves the viability of a business model that leverages insights gained from con-sumer behavior for data analytics/marketing services and advertising purposes. A healthy, growing market exists for data streams that help
advertisers optimize their efforts.
Additionally, the success of over-the-top service providers provides the valuable precedent and supporting evidence that users are willing to accept data disclosure and commercial utilization of their internet behavior under certain conditions. If users perceive they’re receiving
sufficient value – such as the value derived from services provided by
Google, Facebook, Twitter and Pinterest, for example – in exchange for the commercial use of their internet data, users will implicitly accept
this transaction. If users perceive their derived value is not sufficient
to justify such a compromise - or, more importantly, if this value is not properly articulated – users will reject such an arrangement.
If users perceive
they’re receiving
sufficient value in
exchange for the
commercial use of
their internet data,
users will implicitly
accept this
trans-action.
Market trends are converging to
enable service providers to
develop strategies that leverage
the internet activity data of their
subscribers for commercial
purposes.
Existing and emerging data management platform companies place a high value on the “in-session, first party behavioral” data service providers are uniquely positioned to provide.
Consumer Data & the Internet Service Provider: Lessons from the Past
Previous attempts to monetize subscriber data via the integration of 3rd
party technology within a number of high-profile internet service pro
-vider networks have been met with significant resistance from consum -ers and privacy advocacy groups. As a result, the following sugges-tions may prove valuable when considering initiatives to leverage data
gleaned from subscriber’s internet activity for commercial purposes: • Service providers should clearly and widely disclose their practices
and policies related to the use of their subscriber’s internet usage and data
• Data related to subscribers’ internet behavior should be stored only
within the confines of the service provider’s network or transferred/
stored with widely disclosed trusted data partners
• Any data analysis programs should have a well-defined “opt-out”
policy and easy-to-navigate “opt-out” process
• The utilization of existing internet infrastructure, rather than the deployment of ancillary solutions such as deep packet inspection
equipment, should be adopted when available (Note: this also deliv
-ers the added benefit of reducing capital expenditures) • The distribution of undisclosed device-level software, such as
cookie tracking or keystroke monitoring software, should be avoided Of course, there are a variety of methods and technologies available to service providers to support their data collection and analysis ef-forts. When considering best practices, non-invasive solutions that don’t require additional hardware and/or software to reside in-network
offer significant advantages when considering the privacy concerns of
subscribers. Deep packet inspection and internet cookie-based data
collection solutions offer the data collection functionality to support the commercialization of subscriber’s internet behavior, but at the signifi -cant cost of jeopardizing the privacy of the service provider’s customer
base. DNS data collection and analysis solutions offer service providers
the functionality required to participate in the emerging data economy
without the significant sacrifice of subscriber privacy.
DNS solutions are, by design, a critical component of a service pro-vider’s internet infrastructure. By incorporating data analytics function-ality into this core infrastructure element, DNS-based analytics grants
service providers the ability to decide to analyze or discard specific subscriber’s data streams. This is a significant architectural difference
compared to deep packet inspection solutions when viewed from the perspective of subscriber privacy.
Consumer Data & the Internet Service Provider: Guidance for the
This development is driven by increased demand from the market for new data streams and unique consumer insights. This rising demand is, essentially, a new revenue stream for companies that are able to meet the market’s requirements and innovate with subscriber’s interests in mind.
Future
Market trends are converging to enable service providers to develop strategies that leverage the internet activity data of their subscribers for commercial purposes. Innovations relative to the collection and analysis of data are being introduced at breath-taking speeds. Data collection
and analysis products and services are also maturing in terms of afford -ability and us-ability. In short, a healthy and growing data economy is emerging as a result of these technological advancements.
This development is driven by increased demand from the market for new data streams and unique consumer insights. This rising demand is, essentially, a new revenue stream for companies that are able to meet the market’s requirements and innovate with subscriber’s interests in mind.
The final – most significant – trend is consumers’ demonstrated will -ingness to agree to the commercial use of their data in exchange for valuable services. Service providers are already providing a service that many consumers deem indispensible. Of course, service providers are constantly focused on developing new and innovative products and services to increase customer loyalty and satisfaction. We contend one path towards a stronger carrier/subscriber relationship is through data analytics and marketing services. That is, if such a program is devel-oped, deployed and discussed with the subscriber’s best interest in mind – a program to deliver additional value to subscribers. To that end, the following suggestions may assist service providers as they consider entering the consumer data and marketing services market.
• Proactive stakeholder engagement before implementation includ-ing solicitinclud-ing input from subscribers, industry analysts and privacy/ advocacy groups
• Transparent data/privacy policy that discloses specific data collect -ed and analyz-ed, all 3rd parties involv-ed in the initiative, the basic architecture utilized, the locations where the data is stored and the
purpose of the effort
• Ability for subscribers to easily request their personal “data file” to
better understand the initiative and assuage consumer’s privacy concerns
• Easy-to-use and accessible subscriber opt-out procedures
• Acknowledgement of the commercial value of each subscriber’s unique data set and commitment to provide compensation to sub-scribers
• Network access service discounts, free or discounted complimen-tary services, charitable donations in the subscriber’s name The development of an innovative business model that embraces the
An innovative
business model
embracing privacy
and transparency
may help develop
new recurring
revenue streams
while solidifying
the relationship
with existing
subscribers.
new data economy and the adoption of a policy of transparency that
respects the privacy concerns of subscribers may combine to offer
service providers an opportunity to develop a new, recurring revenue stream while solidifying the relationship with their existing subscribers.
Certainly, an opportunity worthy of further exploration.
To learn more about how Nominum can help your organization activate your stranded data assets, visit www.Nominum.com.
The author, Matthew Madden, can be contacted via email at
